Crypto bulls counting on Federal Reserve rate cuts to push down Treasury yields and weaken the dollar may be facing a tougher path than expected. Despite clear signals that easing is on the horizon, market behavior suggests the traditional playbook may no longer apply.

The Fed is expected to cut rates by 25 basis points on Dec. 10, lowering the target range to 3.5%-3.75% and extending the easing cycle that began last September. Analysts at firms including Goldman Sachs see further cuts next year, potentially bringing rates down to 3%. Historically, such moves would pressure long-term yields lower and depress the dollar—conditions generally favorable for risk assets like bitcoin.

Yet the 10-year Treasury yield remains stubbornly above 4%, up roughly 50 basis points since the Fed’s first cut in mid-September 2024. Market participants cite persistent fiscal concerns, the prospect of heavy government debt issuance, and lingering inflation as key factors keeping yields elevated.

“As the federal government issues more debt, yields rise unless demand increases correspondingly,” Fidelity noted, highlighting the structural pressure on U.S. Treasuries.

Global dynamics are also contributing. Expectations for a potential Bank of Japan rate hike and rising Japanese Government Bond yields are reversing the ultra-low-yield environment that helped suppress borrowing costs globally during the 2010s and the pandemic.

The dollar index is showing similar resilience. Much of the expected easing is already priced in, and a comparatively strong U.S. economy is supporting the greenback. The index’s downtrend, which began in April, stalled around 96.000 in September before bouncing back toward 100.00 multiple times.

The combined strength of Treasury yields and the dollar suggests a shift in macro behavior. The old formula—Fed easing drives lower yields and a softer dollar, boosting crypto—may no longer hold. For bitcoin and other digital assets, this could mean a more complex and less predictable macro backdrop than traders have seen in recent years